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Ahead of the Bell: Five Below

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October 3, 2013 06:43 AM EST | AP

NEW YORK — NEW YORK (AP) — Shares of Five Below rose in premarket trading Thursday as an analyst raised his rating and price target for the discount retailer, saying it's likely to continue to see strong sales thanks to its selection of merchandise and its low prices.

Charles Grom of Sterne, Agee & Leach said in a client note that Five Below should continue to see strong revenue at stores open at least a year partly because shoppers are increasingly focusing on getting more value for their money and because its sells on-trend products like the Rainbow Loom, a popular toy that allows children to make bracelets and rings out of colored rubber bands.

Revenue at stores open at least a year is a key gauge of a retailer's health because it excludes results from stores recently opened or closed.

Grom also said that Five Below's new store openings show no signs of slowing, with the company in somewhat of a unique position given its focus on pre-teens and teenagers and its low prices.

The analyst boosted Five Below to "Buy" from "Neutral" and increased its price target to $56 from $44.

Five Below Inc. does not comment on analyst reports.

Its stock rose 33 cents to $46.93 in premarket trading about four hours ahead of the opening.